Official Report: Minutes of Evidence

The Chairperson (Mr Brett): I am delighted to welcome Mark McGregor to the Committee. He will provide an oral briefing on behalf of the Department. Mark, I will hand over to you at this stage, sir.

Mr Mark McGregor (Department for the Economy): Thank you very much, and good morning.

You have received a briefing paper that goes into the Bill in quite a lot of detail, so I intend to speak to notes that set out the current situation on some of the key issues. Forgive me, given that there is quite a lot of detail, I will refer to notes.

On 4 September, Lord Leong, acting on behalf of the Department for Business and Trade (DBT), wrote to Minister Murphy to advise that he had introduced the Product Regulation and Metrology Bill that same day. There had been no substantive engagement with Minister Murphy or officials ahead of the introduction, and, in this case, no agreement in principle had been sought. At present, the Minister is unable to support a legislative consent request due to several outstanding concerns, which are set out in your briefing paper.

Generally, the Bill is enabling legislation that confers broad, largely unchecked powers on the Secretary of State for Business and Trade to make regulations related to products and metrology.

The Bill is split into two parts: products in one half; metrology in the other. Metrology is legal weights and measures.

Product regulation is mainly a reserved matter, is generally a Windsor framework area for Northern Ireland and has a category in law as relevant separation agreement law for Northern Ireland. Product regulation in GB is what is called "assimilated law". It grew out of retained EU law that was brought over from the EU on exit. However, metrology — weights and measures — is a largely devolved area. It is assimilated law for Northern Ireland and Great Britain, so the Windsor framework provisions do not apply to metrology.

The definition of product in the legislation is so broad that it is impossible to identify everything within scope and the relevant legislation. Essentially, a product is defined as something that is processed to add value and that is not food or feed. Essentially, any object that you think about that can be sold is potentially within scope. Most products, as we have said, are reserved areas. A small subset in chemicals is a devolved competence that falls to the Department: the areas are classification, labelling and packaging (CLP) and biocidal products.

The most predictable uses of the power by the UK Government are unlikely to be applicable in Northern Ireland, as we will generally follow equivalent EU legislation that GB seeks to align with in that instance. As expected, most usages will be aligned with the law that applies in England, Scotland and Wales with EU regulation. It already applies in Northern Ireland. That could be broadly welcomed, as it would work to limit and mitigate potential regulatory diversions and trade issues between Northern Ireland and other parts of the United Kingdom.

There are also powers to make regulations for metrology — weights and measures — which is not a Windsor framework area, so they could extend to Northern Ireland if they were made on a UK-wide basis. However, metrology is generally a non-contentious and very technical area, and the relevant policy officials in DFE — our consumer affairs bureau and Trading Standards Service — do not expect the issue with the powers to cause great difficulties. However, there is still an issue with the nature of the powers in relation to metrology, and any resolution to the bigger issue around products would incidentally resolve any concerns there as well.

There is also the potential to plug some powers gaps that have arisen as a result of EU exit in the ability to amend secondary legislation, particularly assimilated law derived from the EU, which, previously, was made under section 2(2) of the European Communities Act. At present, it seems that that would address a powers gap and allow the UK Government to amend some areas of secondary legislation where they have a powers deficit.

I will move on to the Minister's general concerns about the Bill. Those concerns are broadly shared by the other devolved Administrations, as you will have seen in their legislative consent memoranda (LCMs) and the responses that are published on their websites. The main issue is conferring broad, non-concurrent powers on the Secretary of State to make regulations in an area of devolved competence. I will just clarify that concurrent powers are those that are operated jointly in an area of devolved competence, so we would have a power in a devolved area for the Department to act independently, but that would create a power for the Secretary of State to potentially make legislation in that area; and non-concurrent means that he does not need to seek agreement from the devolved Administration, even if the area is one of devolved competence. That, then, is an issue for the Minister, in that, obviously, the Secretary of State would potentially be empowered to make legislation in areas of devolved competence without any agreement from the relevant Minister or Assembly. At present, the future usage is unknown. However, as drafted, the Bill confers powers that would allow the Secretary of State to make the regulations.

We had another concern around other departmental interests not being considered. Indeed, the request for support — legislative consent — came only to Minister Murphy. One clause specifically allows the Secretary of State to make product regulations relating to mitigating environmental impacts. That is clearly of interest to our colleagues in DAERA, along with the product definition, which will pick up products that are very specifically in their area: things such as plant protection products, fertilisers and the like.

Other Departments could be caught in the net because the product definition is so wide. They might have very small areas that are within the scope of the Bill. DOJ could be drawn in on firearms and civil explosives, and Infrastructure could be drawn in regarding vehicles.

Some areas in which the Bill could be used have been identified. Obviously, it is an enabling Bill. We are not entirely sure how it will be applied, but the drafting indicates that it may be used to mirror the market surveillance regime that is applicable in Northern Ireland under the Windsor framework. That is a sort of risk management approach on top of the normal enforcement that has been applicable here since 2021. There is the potential to mirror that and have the same legislation as there is in England, Scotland and Wales. There is the potential to mirror the ecodesign for sustainable products regulation, which has come into effect in Northern Ireland. That has been scrutinised by the Democratic Scrutiny Committee, and we await product-specific regulations. Once that starts, it could drive divergence, but there is the potential for GB to mirror that. There is also the potential to mirror the general product safety regulation, which was quite topical before Christmas, given its particular impact on small GB traders supplying NI. It would look at introducing the same safety data factors required for both markets, but there would still be some issues that we would need to address regarding the general product safety regulation, even if it were mirrored. There is a difficulty around the presence of a responsible economic operator in either the NI or the EU market.

There is more ambitious stuff that Lord Leong highlighted in the House of Lords, which looked at the potential for AI legislation under the powers of the Bill. Minister Murphy spoke with Lord Leong about those issues ahead of Second Reading in the House of Lords and set out the concerns in writing afterwards. As I said, many of those concerns were shared by the Scots and Welsh and were also raised by several lords at Second Reading. It was agreed with Lord Leong that officials would engage to seek resolution on the issues. The key issue is the nature of the power. Progress has been a wee bit slow in that respect. The Bill, which started in the Lords — it is a Lords Bill, and it will go down to the Commons afterwards — is having quite a difficult passage, and there are numerous issues to resolve. There are constitutional issues at Parliament around the nature of the powers and scrutiny in Parliament. It seems as though the Bill team is looking at resolving those ahead of dealing with the devolved Administrations' issues. However, officials in DBT have recommended a potential solution to their Minister and await his view. They advised that, if any agreed resolutions require legislative amendments, it is unlikely that those would be tabled until the Bill was sent down to the House of Commons. That is quite unusual: we would expect those amendments to be made in the first House, but I assume that that is because of the number of issues that are being dealt with. We have not had sight of the solution presented, but, in our engagement with DBT, the only case that we made for resolution related to providing concurrent powers for the Departments, which is the same position that the Scots and Welsh Administrations presented. The Bill completed six quite difficult sittings at Committee Stage during November and December. We were expecting Report Stage some time in January. That has not been scheduled yet, but we expect it some time in February.

We put the Bill team in touch with officials from other Departments, particularly DAERA, which has a big role. Minister Murphy has engaged with Minister Muir in order to arrive at a shared position. A briefing went to the Executive Office as well, because we had to establish interests across the other Departments to ensure that they were engaged with DBT.

That is the update. I am happy to take any questions.

The Chairperson (Mr Brett): Thank you. I appreciate that, Mark. The main concern for the Minister is that legislation that will be made outside Northern Ireland will impact on the people of Northern Ireland without elected representatives or the people of Northern Ireland having a direct say.

Mr McGregor: Yes, there is the potential in the Bill to do that, but, because it will align with stuff that is already with us, it will apply only to GB.

The Chairperson (Mr Brett): I am just trying to get to the crux of the Minister's concern. Is that it?

Mr McGregor: Yes. We do not know what the predictable uses will be in the future, so there is the potential for the Secretary of State to make a regulation in an area of devolved competence.

The Chairperson (Mr Brett): I can share his concern, although it is difficult for me to sympathise with him. A few weeks ago, when we discussed the impact of the Windsor framework and the protocol in Northern Ireland, the Minister voted to continue those operations. The very issue that we raised was that legislation and decisions were being made by elected reps outside this place that impacted on the lives of the people of Northern Ireland every day. From my perspective, I understand the Minister's view, but it is a pity that he has not expressed it on other matters.

Talking about seeking agreement with Minister Muir, you said that the Bill might also impact on matters in the competency of the Department of Justice. Has there been engagement with Minister Long on the issue?

Mr McGregor: Yes. An Executive paper was presented asking all Ministers to nominate officials who could appropriately engage with the Bill. Minister Long has been advised.

Mr McGuigan: Can you explain concurrent powers? You said that they are a potential solution.

Mr McGregor: Yes. Concurrent powers are generally operated jointly. Normally, in a devolved sphere, we operate such powers on our own and do not need to ask the UK Government for approval. In that instance, if the Secretary of State wishes to make a regulation in an area of devolved competence, he needs to seek agreement from the Minister first. As drafted at present, the Secretary of State would not need to seek that agreement, and it would just go ahead. We are asking for concurrent powers so that the Minister and the Assembly have a scrutiny role.

Mr McGuigan: If the Minister or the Assembly does not grant consent, what is the potential impact?

Mr McGregor: It could work out in various ways. If consent is not given, the normal expectation would be that the provisions extending to Northern Ireland would be removed. It would not be difficult with this Bill, because the anticipated usage is only in GB, and our lack of contribution would not be an issue. It is not a road that is being pursued at the minute, so concurrent powers are an option. Obviously, Parliament is sovereign and could decide to ignore the Minister's opinion and go ahead with the Bill as is. We are not getting any indication that that is likely.

There are potential suboptimal solutions out there. DFE has not proactively suggested those, because it wants the optimal solution of concurrent powers. There may be an ability to look at the common framework systems for decision-making. One product group — chemicals and pesticides — already has a common framework that has cooperative decision-making structures and processes defined in it. That could be looked at, but the Department's current position, along with the Scottish and Welsh, is to push hard for the optimal solution of concurrent powers.

Mr McGuigan: Finally, has there been consultation, engagement or responses from business or consumer groups? If so, have any issues arisen?

Mr McGregor: The consultation was done by the UK Government, and I can check in the papers for the responses and have them forwarded to the Committee.

Mr McGuigan: Thank you.

Ms McLaughlin: You indicated that the Bill is having a difficult time with the Committee and that there may be moves to resolve issues raised at that level before it comes to the devolved regions. How long will that take? Do you know the time frame for dealing with it and whether amendments might come forward?

Mr McGregor: It seems that some amendments will be required for the House of Lords. The Delegated Powers and Regulatory Reform Committee called in Lord Leong and officials because it was concerned about the scrutiny role in Parliament. The power, as it stands, allows the Secretary of State to bring in regulations, but, in some areas, such as eco-design, product-level regulations could be brought in by secondary legislation with limited scrutiny. However, it is, essentially, a new policy area that would normally be treated as a Bill. The issue that Parliament, particularly the House of Lords, has with the level of scrutiny of new regulations is that the Secretary of State has the power to make the regulation with limited scrutiny.

Ms McLaughlin: Does this legislation mirror the EU legislation as it applies?

Mr McGregor: No. It is an enabling Bill, so it creates the powers that will allow that mirroring to take place. It will not do anything itself. It sets up the conditions for the Secretary of State to make a series of regulations in the future to make the alignment.

Ms McLaughlin: Obviously, our devolved Administration are completely different from the other two because of our unique relationship with Europe. Has that been taken into consideration in the context of the Bill?

Mr McGregor: Yes. The Bill is very much in that space now. The Government have changed how they have presented it since it was introduced. In the King's Speech, it was very clearly presented as a Bill that was to allow potential alignment with the EU. That has been downplayed a wee bit to make it less robust. The UK Government will decide whether to mirror and make other regulations. It is very much in that space where they are aware that it will do two things: it will allow for better GB trading relationships with the EU, but, as a consequence of that, it will address trading issues between GB and NI.

Ms McLaughlin: OK. Thank you.

Mr Buckley: The central tenet of and motivation for the Bill is that it enables the UK Government to align with Europe where they see mutual interest for the greater benefit of their market. Is that correct?

Mr McGregor: Yes.

Mr Buckley: With that in mind, if the Bill were successful, what would be the timing? Currently how long does it take the UK Parliament to align with an issue that they feel may be of mutual interest? What is the time frame involved?

Mr McGregor: I am sorry, I have to be honest: I do not know how long it usually takes secondary legislation to get through Westminster. I can look into it and get the information back to you. Obviously, it will depend on the complexity of the legislation and any issues around it.

Mr Buckley: One of the cited aims of the Bill is to prevent future divergence between GB and NI. In your view and the Department's view, how do you believe that the Bill accomplishes that aim?

Mr McGregor: Some of the material notes where there is the potential to look at replicating EU regulation. A big one that is relevant to the Department is the ecodesign for sustainable products regulation, which will lay another factor on top of product regulation, such as sustainability, recyclability and that kind of information about supply chains and the like. Product-specific regulations are about to come on tap via the EU in the next couple of years. That would create a situation where GB products, potentially, were not compliant on sustainability characteristics. If the UK mirrored that, the GB manufacturer would be meeting those for its own market, and they are automatically met for the NI-EU market. That makes trade easier because you are not dealing with two entirely separate systems.

Mr Buckley: Does the Department accept that, in the example that you have cited and others, divergence could, going forward, be a huge issue for businesses in Northern Ireland?

Mr McGregor: Yes, divergence creates issues. I spoke to you about the classification, labelling and packaging revision in the Democratic Scrutiny Committee. Divergence will create levels of difficulty for businesses, but it is about whether they persist. In this instance, there is the potential that this regulation could introduce a CLP revision for GB that stopped it persisting. For some, the regulations that we are dealing with are very technical and specific and might not have any impacts because of the nature of our small markets and what our businesses are. The level of impact really depends on what the businesses are using.

Mr Buckley: The crux of this is that an example of the new terminology that has been introduced is "trivergence". Would this, in effect, remove that prospect, given that it would give GB the ability to update, as and when it saw fit, in order to align with the European regulation, if that were perceived as being in the best interest of the United Kingdom?

Mr McGregor: Yes. Hopefully, if operated as we expect, we expect many forms of divergence to be addressed. It is solely in the hands of the UK Government which ones they intend to apply it to, but, from what they are indicating, it is very much stuff in the goods and products space, which is the bulk of annex 2 of the Windsor framework.

Mr Buckley: OK. Thank you.

The Chairperson (Mr Brett): Do members have any other questions? I imagine that this will be a long-running process before making it to the Commons, and the Committee will keep a keen eye on it. At this stage, the Committee can express a view on what it wants to see as an outcome of that. Thank you very much for your time.

Mr McGregor: Sorry, I will just come in on that. I made the processes and the need to respect the Committee's timings very clear to the UK Government. Normally, a legislative consent memorandum would have been laid within 10 days of introduction. We were not in a position to support the Bill, and we gave the briefing paper in that form. I advised them that we need to carry out the full legislative process, including giving the Committee the legislative consent memorandum and allowing time for a report and debate.

The Chairperson (Mr Brett): Was the paper that went to the Executive just for discussion?

Mr McGregor: It was a discussion paper. It was very similar to the paper that the Committee received.

The Chairperson (Mr Brett): Is there no resolved action from that at this stage?

Mr McGregor: No. There were no objections to the position. Minister Muir, who is particularly engaged, was agreeable to the approach adopted by Minister Murphy.

The Chairperson (Mr Brett): OK. Thank you very much.

Mr McGregor: Thank you.